Third Circuit Decisions Archives - New Jersey Legal Pulse

The Third Circuit Addresses American Pipe Tolling before a Class Certification Decision

The Third Circuit recently issued a decision holding that putative class members can benefit from equitable tolling even before a district court decides a motion for class certification. Aly v. Valeant Pharms. Int’l. Inc., No. 19-3326, __ F.3d __ (3d Cir. June 16, 2021).

The decision addresses a class action doctrine known as “American Pipe” tolling. Under American Pipe & Construction Company v. Utah, 414 U.S. 538 (1974), for which the doctrine is named, the statute of limitations for claims by putative class members is tolled from the time a putative class action complaint is filed until a class certification decision. The doctrine serves important policy goals. Without the rule, for example, putative class members would be forced to intervene or file their own claims while awaiting a decision on class certification in order to satisfy the statute of limitations. American Pipe, therefore, preserves the right for putative class members to file a timely complaint after class certification is denied while avoiding a multiplicity of lawsuits pending a class certification decision.

The Supreme Court has elaborated on the American Pipe doctrine in subsequent cases to clarify that tolling applies to separate lawsuits, not just motions to intervene, see Crown, Cork & Seal Co., 462 U.S. 345 (1983); that tolling only applies to statutes of limitations, not statutes of repose, see Cal. Public Employees’ Retirement System v. ANZ Securities, Inc., 137 S. Ct. 2042 (2017); and that tolling only applies to individual, rather than class, complaints, see China Agritech, Inc. v. Resh, 138 S. Ct. 1800 (2018).

Third Circuit Adopts Rule That Removal of State Litigation to Federal Court Does Not Confer Personal Jurisdiction over the Defendant

Adrienne C. Rogove

In the last few years, the United States Supreme Court and federal courts in New Jersey and Pennsylvania have provided additional guidance on what circumstances give rise to personal jurisdiction over foreign Defendants. The Third Circuit addressed the issue of consent to jurisdiction in Danziger & DeLlano v. Morgan Verkamp, LLC, in its January 15, 2020, decision where it held that removing a case to federal court is not a waiver of the defense of personal jurisdiction. In Danziger, two law firms were engaged in a dispute over whether the plaintiff firm was entitled to a referral fee following the defendant firm’s settlement of a qui tam action allegedly referred by the Plaintiff Danziger (“Danziger”).

Danziger is a Texas law firm. Danziger alleged it referred potential qui tam clients to Morgan and Verkamp, LLC (“Morgan Verkamp”), an Ohio law firm. Danziger claimed it formed an oral contract with Morgan Verkamp to collect one-third of the attorneys’ fees as a referral fee in connection with a qui tam case filed on behalf of Michael Epp. The Epp case was settled for “hundreds of millions of dollars.” Danziger & DeLlano v. Morgan Verkamp, LLC, __ F.3d __ (3d Cir. 2020) (slip op. at 4). Continue reading “Third Circuit Adopts Rule That Removal of State Litigation to Federal Court Does Not Confer Personal Jurisdiction over the Defendant”

Blank Rome Appellate Litigation Practice Develops Third Circuit Civil Appeals Practice Note Resources for Thomson Reuters Practical Law

Stephen M. Orlofsky and Adrienne C. Rogove

Blank Rome’s Appellate Litigation practice is pleased to announce that the team has collaborated with Thomson Reuters Practical Law to develop practice note resources on civil appeals in the U.S. Court of Appeals for the Third Circuit, which are available for our clients and readers using the links below. Thomson Reuters’ members are also able to download these resources through our Firm’s published Contributor Page.

We invite you to review our practice note resources, and hope you find them both interesting and informative. Continue reading “Blank Rome Appellate Litigation Practice Develops Third Circuit Civil Appeals Practice Note Resources for Thomson Reuters Practical Law”

Third Circuit Rules That Traditional Trusts Are Citizens of the States of Its Trustees and Business Trusts Are Citizens of the States of Its Owners for Diversity Purposes

Richard L.A. Wolf

The United States Court of Appeals for the Third Circuit recently determined that, for purposes of determining diversity of citizenship, the citizenship of a traditional trust is only that of its trustees, while the citizenship of a business trust is that of each of its constituent owners. GBForefront, L.P. v. Forefront Mgmt., LLC, No. 16-3905 (3d Cir. Apr. 19, 2018).

The case involved claims brought by GBForefront, a limited partnership whose membership included various trusts, against Forefront Management Group, LLC (“FMG”) and others, alleging that the defendants had defaulted on the terms of a settlement agreement. FMG moved to dismiss, arguing that complete diversity, the basis for subject matter jurisdiction in this case, was lacking. Between the filing of the motion and the District Court’s decision, the United States Supreme Court decided Americold Realty Trust v. Conagra Foods, Inc., 136 S. Ct. 1012 (2016), in which it held that the citizenship of a business trust includes the citizenship of all its members. Continue reading “Third Circuit Rules That Traditional Trusts Are Citizens of the States of Its Trustees and Business Trusts Are Citizens of the States of Its Owners for Diversity Purposes”

Third Circuit Restricts Corporate Officer Liability under Telephone Consumer Protection Act

Adrienne C. Rogove

In a recent precedential opinion in City Select Auto Sales, Inc. v. David Randall Associates, Inc., 885 F.3d 154 (3d Cir. 2018), the United States Court of Appeals for the Third Circuit affirmed a judgment by the United States District Court for the District of New Jersey following a jury verdict dismissing a case brought under the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227, against the president and co-owner of David Randall Associates, Inc. (“DRA”). DRA was a commercial roofing company. Raymond Miley (“Miley”) was its president and a majority shareholder. DRA hired Business to Business Solutions (“Business Solutions”) to fax unsolicited advertisements to thousands of fax numbers. City Select was the recipient of some of these faxes.

Under the TCPA, it is “unlawful for any person…to use any telephone facsimile machine…or other device to send, to a telephone facsimile machine, an unsolicited advertisement.” 47 U.S.C. § 227(b)(1)(C) (emphasis added). The Federal Communications Commission has defined “sender” as the person “on whose behalf [the faxes] are transmitted.” 10 FCC Rcd. 12391, 12407 (1995). Here, City Select argued that the “on whose behalf” language was meant to place liability on the author or originator of the relevant faxes, and therefore, Miley, as the author or originator of the faxes, was a “sender” under the TCPA. Continue reading “Third Circuit Restricts Corporate Officer Liability under Telephone Consumer Protection Act”

Third Circuit Holds “Settlement Language” in Collection Letter Can Be Misleading

Jonathan M. Robbin, Edward W. Chang, and Scott E. Wortman

In a change of course from its prior holding in Huertas v. Galaxy Asset Mgmt., 641 F.3d 28 (3d Cir. 2011), the Third Circuit rules that the terms “settlement” and “settlement offer,” in connection with collecting of a time barred debt, may connote litigation and thus mislead a consumer. However, the Court continues to hold that settlement terms alone do not necessarily constitute deceptive or misleading practices under the FDCPA.

In a unanimous published decision in Tatis v. Allied Interstate LLC, No. 16-4022 (3d Cir.) the Third Circuit reversed the District of New Jersey’s granting of a motion to dismiss. The lower court had held that a debt collector’s attempt to collect the time-barred debt did not violate the Fair Debt Collection Practices Act (“FDCPA”) because the collection letter was not accompanied by a threat of legal action. In its order overruling the lower court, the Third Circuit deviated from its prior holding in Huertas v. Galaxy Asset Mgmt., 641 F.3d 28 (3d Cir. 2011) and instead looked to the more recent decisions from its sister circuits—the Fifth, Sixth, and Seventh—which all held that the term “settle” could mislead a consumer. Continue reading “Third Circuit Holds “Settlement Language” in Collection Letter Can Be Misleading”

A Lesson from the Third Circuit on Arbitration Clauses: Say What You Mean

Stephen M. Orlofsky and Deborah Greenspan

A recent decision by the United States Court of Appeals for the Third Circuit reminds us that when we want an arbitration clause to apply in certain situations or to certain parties, we have to build that intention into the plain terms of the contract. In White v. Sunoco, Inc., — F.3d —, No. 16-2808, 2017 WL 3864616 (3d Cir. Dec. 5, 2017), Sunoco promoted the “Sunoco Awards Program,” under which customers who used a Citibank-issued “Sunoco Rewards Card” credit card were supposed to receive a 5-cent per gallon discount on gasoline purchased at Sunoco gas stations. The promotional materials included a document entitled “Terms and Conditions of Offer,” which indicated that Citibank issued the Sunoco Rewards Card and applicants had to meet Citibank’s creditworthiness criteria to obtain the credit card. Continue reading “A Lesson from the Third Circuit on Arbitration Clauses: Say What You Mean”

First Amendment Protects Right to Record Police Activity, Third Circuit Holds

Ethan M. Simon

The Third Circuit recently joined the growing consensus of courts recognizing that the First Amendment protects the act of recording police officers conducting their official duties in public. In Fields v. City of Philadelphia, — F.3d —, 2017 WL 2884391 (3d Cir. July 7, 2017), two individuals brought claims against the City of Philadelphia and certain police officers for violating their First Amendment rights to record public police activity. Continue reading “First Amendment Protects Right to Record Police Activity, Third Circuit Holds”

Single Racial Slur May Be Sufficient to Establish Workplace Harassment

Mark Blondman and Joel Michel

The Third Circuit Court of Appeals recently held that a single isolated use of a racial slur may be sufficient to establish unlawful workplace harassment.

Background and Analysis:

On July 14, 2017, a three-judge panel of the U.S. Court of Appeals for the Third Circuit ruled that a single racial slur may be sufficient to state a claim for unlawful workplace harassment.

In Castleberry v. STI Group, the plaintiffs—two African American general laborers working on a pipeline project—alleged that they were subjected to a hostile work environment when they were told by a supervisor that they would be fired if they “[n-word]-rigged” a fence that they had been instructed to remove. Defendants argued there was no precedent for a finding that a single racial epithet could be enough to create a hostile work environment. Judge Thomas Ambro, writing for the panel, rejected the defendants’ position, holding that the United States Supreme Court’s adoption of the “severe or pervasive” standard in harassment claims suggested that a “supervisor’s single use of a racial slur could be adequately ‘severe’ and sufficient to state a claim” for harassment.

The Third Circuit’s ruling clarified case law within the circuit (covering Delaware, New Jersey, and Pennsylvania) that has been somewhat in conflict for decades. Between 2001 and 2012, district courts within the circuit have used a number of different standards for determining whether a plaintiff has adequately pled workplace harassment. Some used the “severe or pervasive” standard, at least three used the “pervasive and regular” standard, and at least one case used the “severe and pervasive” standard. In its decision, the Court in Castleberry made clear that the proper standard for evaluating hostile work environment cases is whether the conduct is “severe or pervasive.”

In reversing the U.S. District Court for the Middle District of Pennsylvania’s dismissal of the plaintiffs’ claims, the Court held that the racially charged slur used in the presence of non-African American coworkers, coupled with threats of termination, could constitute sufficiently severe conduct that could result in the creation of a hostile work environment.

Takeaways:

The Castleberry decision reminds employers that even a single isolated incident, such as a repugnant comment, can result in legal liability for discrimination or harassment. Employers should take affirmative steps to train employees, especially management personnel, that slurs and epithets based on any protected category (for example, race and/or color) are not appropriate in the workplace.

Employers should do the following:

Clearly communicate through employee handbook policies that discrimination and harassment will not be tolerated, and ensure that all employees receive a copy of the handbook and sign an acknowledgement.
Immediately and thoroughly investigate any complaints of discrimination (including harassment) and implement prompt remedial measures, which are designed to correct any prior issues and prevent similar conduct from occurring in the future.
Periodically train all supervisors and employees regarding discrimination and harassment recognition and prevention.

For more information, please contact Mark Blondman, Joel Michel, or a member of Blank Rome’s Labor and Employment group.

Employer Cannot Be Liable for Interfering with Non-Compete It Doesn’t Know Exists, Third Circuit Holds

Ethan Simon

Restrictive covenants are common in many industries. Under New Jersey and Pennsylvania law, a defendant may be liable for tortious interference with a restrictive covenant only if it has actual knowledge of the contract with which it allegedly interferes. In Acclaim Systems, Inc. v. Infosys, Ltd.,[1] the Third Circuit reaffirmed this rule in the context of IT consulting non-competes and expressed its reluctance to recognize any exceptions.

In Acclaim Systems, Time Warner Cable (“TWC”) was looking to cut costs on its Sales Force Dot Com (“SFDC”) project by switching providers for certain IT services. When TWC switched from Acclaim to Infosys, TWC asked Infosys to consider retaining four individuals who were already working on SFDC on behalf of Acclaim. All of these individuals had non-competes with Acclaim that prohibited them from working on SFDC on behalf of Infosys. Continue reading “Employer Cannot Be Liable for Interfering with Non-Compete It Doesn’t Know Exists, Third Circuit Holds”